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Showing 221 to 240 of 871 Records
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2012 (5) TMI 656
Issues involved:
The judgment involves issues related to addition of expenses on repairs & maintenance of rented premises, addition of unsecured loans u/s. 68 of the Act, treatment of interest paid as an allowable expenditure, and deletion of disallowance of remuneration paid to directors.
Addition of expenses on repairs & maintenance of rented premises:
The assessee claimed deduction for repairs & maintenance expenses incurred for studios hired to producers of TV serials and advertisement films. The AO treated the expenses as capital expenditure, included in the block of assets, and disallowed a portion. However, the Tribunal found that the expenses had a direct nexus with the earning of income and were revenue expenditure. The entire amount was held to be revenue expenditure, and the addition made by the AO was deleted.
Addition of unsecured loans u/s. 68 of the Act:
The AO made an addition u/s. 68 for unsecured loans where the assessee failed to provide adequate evidence. The CIT(A) refused to admit additional evidence supporting the genuineness of the credits. The Tribunal set aside the order and directed the AO to decide the issue afresh after allowing the assessee a reasonable opportunity to be heard and present evidence.
Treatment of interest paid as an allowable expenditure:
The assessee incurred interest liability due to a demand raised by Aarey authorities, which was held to be allowable as a deduction for the current year. The Tribunal upheld the deletion of the addition made by the AO, as the interest liability accrued for the first time in the current year.
Deletion of disallowance of remuneration paid to directors:
The AO disallowed a portion of director's remuneration based on a provision of the Companies Act, which was not applicable to private companies. The CIT(A) ordered the deletion of the addition, stating that the AO's action lacked a valid basis. The Tribunal upheld the deletion of the disallowance, as the AO's reasoning was found to be unjustified.
In conclusion, the Tribunal partly allowed the assessee's appeal and dismissed the Revenue's appeal, pronouncing the order on the 16th day of May, 2012.
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2012 (5) TMI 655
Issues Involved:
1. Applicability of Proviso to Section 32(1) for Depreciation Claim.
2. Non-Allowance of Provision for Bad and Doubtful Debts u/s 36(1)(viia).
Summary:
1. Applicability of Proviso to Section 32(1) for Depreciation Claim:
The assessee, a banking company, contested the restriction of its depreciation claim u/s 32(1) of the Income Tax Act, 1961, arguing that the proviso to section 32(1) is not applicable as it pertains only to the year of acquisition of the assets. The Tribunal found the assessee's claim maintainable for assets acquired prior to the relevant previous year, noting that the assets were in use for 181 days, thus exceeding the 180-day requirement. The Tribunal upheld the assessee's claim for these assets. However, for assets acquired during the relevant previous year, the Tribunal held that the second proviso to sec. 32(1) is applicable, and the assessee must furnish details of such assets and their usage.
2. Non-Allowance of Provision for Bad and Doubtful Debts u/s 36(1)(viia):
The assessee's claim for provision for bad and doubtful debts was disallowed on the grounds that it was not a banking company as of the end of the relevant previous year. The Tribunal noted that the assessee's banking license was restored on 14-09-2004, but the license remained canceled from 29-09-2001 to 14-09-2004. The Tribunal observed that the assessee was a banking company up to 21-09-2002, as per section 36A of the Banking Regulation Act, 1949. The Tribunal restored the matter to the AO for fresh adjudication, directing the AO to verify the details and issue findings on whether the provision for Rs. 48.49 lacs qualifies u/s 36(1)(viia). For the provision of Rs. 12.30 lacs towards sub-standard assets, the Tribunal directed the AO to verify if these assets include loss or doubtful assets as per RBI norms and allow the claim accordingly.
Conclusion:
The assessee's appeal was partly allowed and partly allowed for statistical purposes, with directions for fresh adjudication on specific issues by the AO.
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2012 (5) TMI 654
Investment towards unaccounted purchases - addition u/s 69 - addition being the estimation of profit at 5% on the unaccounted sales - addition on excess cash - unrecorded sales - addition on account of provisions of section 40A(3) of the Act though the assessee's income is determined u/s. 44AF
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2012 (5) TMI 653
Rejection of books of accounts - estimation of NP - Disallowance u/s. 40(a)(ia) - Held that:- Where the books of account have been rejected the revenue cannot rely on the same books of account for making any other addition. It was also held that when an estimate is made towards income of the assessee, it is in substitution of the income that is to be computed u/s. 29 and in other words, all the deductions which are referred to u/s. 29 are deemed to have been taken into account, while making such an estimate. This will also mean that the embargo placed in section 40 is also taken into account.
There cannot be any further addition u/s. 40A(3), 40(a)(ia) of the act or towards prior period income. However, we make it clear that the income so determined consequent to this order, after considering the above directions, shall not go below the income returned by the assessee for the assessment year under consideration, if so returned income to be considered.
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2012 (5) TMI 652
Depreciation computation - Held that:- This matter can easily be verified by the assessing officer and the explanation of the assessee in this regard can be checked from the records by the assessing officer. In these circumstances, we agree with the order of the CIT insofar as this issue is concerned referring to the matter to the AO for arithmetical verification and reconciliation between depreciation which in effect is debited to the profit and loss account and the amount which is added back in the memo of income, who will decide the issue after giving reasonable opportunity to the Assessee.
Provision made towards mine closure obligation - revision u/s 263 - Held that:- It is observed that the basis of calculation for the relevant AY 2006-07 for ₹ 71.18 crores was submitted during the original assessment and accepted by the AO. The detailed calculation of ₹ 21.31 crores charged to P&L A/c (on the basis of ₹ 71.18 crores) was also enclosed and produced before the CIT. Hence, the CIT is wrong in his observation that the estimate of ₹ 21.31 crore is excessively on a higher side and absolutely no realistic or rational basis for such calculation.
The CIT is not correct in invoking the provisions of Sec.263 as we find that the issue is debatable and when two views are possible the Assessing Officer has taken one view. The provisions for an accrued existing liability, even though, the actual expenditure may take place at a later date, is an allowable deduction and the CIT erred in treating it as an unascertained liability. Therefore, we set aside the order of the CIT passed u/s 263 and the order of the AO is restored.
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2012 (5) TMI 651
Extension of time for deposit of the amount pursuant to order dated 08.12.2005 - Held that:- The petitioner having failed to deposit ₹ 5 lacs and furnish indemnity bond, the consequence of such failure ensued immediately thereafter and there is no occasion for consider prayer of extension of time to deposit the amount at this distance of time - there is no justification to entertain the application after such a long period of more than 6 years - application rejected.
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2012 (5) TMI 650
Issues involved: Appeal by Revenue against deletion of addition u/s 68 of the Income Tax Act, 1961 regarding unexplained share application money received by the assessee from two companies.
Issue 1: Sustainability of addition u/s 68 of the Act
The judgment pertains to two appeals by the Revenue challenging the deletion of addition u/s 68 of the Act concerning unexplained share application money received by the assessee from two companies for the assessment year 2003-04. The primary issue revolves around the genuineness of the transactions and the application of section 68. The Revenue's contention is based on the alleged admission by a director of one of the share applicant companies regarding providing accommodation entries, suggesting the investments were bogus. The onus is on the Revenue to prove that the amounts did not belong to the creditors and belonged to the assessee. The absence of proper enquiry by the assessing authority was noted, and the Revenue failed to provide substantial evidence to impugn the transactions as not genuine. The tribunal dismissed the appeals by the Revenue, emphasizing the importance of evidence and proper enquiry in such cases.
Issue 2: Burden of proof and evidentiary requirements
The judgment discusses the burden of proof in cases involving section 68 of the Act, citing relevant case law. The burden lies on the assessee to prove the identity, capacity, and genuineness of the transaction. The assessee presented relevant documentary evidence to support their case, which was not rebutted effectively by the Revenue. The non-production of directors of the investor companies was noted, but the absence of evidence to challenge the transactions' genuineness weakened the Revenue's case. The judgment highlights the significance of evidence, proper enquiry, and the onus on the Revenue to establish their claims. The decisions cited by the Revenue regarding burden of proof were considered but deemed not directly applicable to the present case involving share investments.
Separate Judgment:
No separate judgment was delivered by the judges in this case.
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2012 (5) TMI 649
Allowable business expenditure - Whether the assessee has set up and commenced its real estate business during the relevant previous year? - Whether the assessee can claim business expenditure against interest income credited to P & L A/c?
Held that:- As the assessee has already acquired land entered into development agreement and has started development and construction work for the real estate project, it has set up and commenced its business and therefore entitled to claim expenses as incurred which was debited to Profit & Loss A/c against interest income. In view of the above, we allow the grounds raised by the assessee for the years under consideration.
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2012 (5) TMI 648
Suit for permanent injunction - principles of res judicata - Entitlement to be declared as owners of half portions of the property - HELD THAT:- It would not be an exaggeration but on the contrary an understatement if it is said that all facets of fraud get attracted to the case at hand. A rustic and illiterate woman is taken to court by a relation on the plea of creation of a lease deed and magically in a hurried manner the plaint is presented, written statement is drafted and filed, statement is recorded and a decree is passed within three days. On a perusal of the decree it is manifest that there is no reference of any kind of family arrangement and there is total non-application of mind. It only mentions there is consent in the written statement and hence, suit has to be decreed. Be it noted, it was a suit for permanent injunction. There was an allegation that the respondent was interfering with the possession of the plaintiff. What could have transpired that the defendant would go with the plaintiff and accede to all the reliefs. It not only gives rise to a doubt but on a first look one can feel that there is some kind of foul play. However, the learned trial Judge who decreed the first suit on 27.11.1973 did not look at these aspects. When the second suit was filed in 1984 for title and the third suit was filed for possession thereafter, the courts below had routinely followed the principles relating to consent decree and did not dwell deep to find out how the fraud was manifestly writ large. It was too obvious to ignore. The courts below have gone by the concept that there was no adequate material to establish that there was fraud, though it was telltale. That apart, the foundation was the family arrangement. We have already held that it was not bona fide, but, unfortunately the courts as well as the High Court have held that it is a common phenomenon that the people in certain areas give their property to their close relations. We have already indicated that by giving the entire property and putting him in possession she would have been absolutely landless and would have been in penury. It is unimaginable that a person would divest herself of one’s own property in entirety in lieu of nothing. No iota of evidence has been brought on record that Bhali, the respondent herein, had given anything to Badami in the arrangement. It is easily perceivable that the rustic woman was also not old. Though the decree was passed in 1973 wherein it was alleged that the defendant was already in possession, she lived up to 1992 and expired after 19 years. It is a matter of record that the possession was not taken over and inference has been drawn that possibly there was an implied agreement that the decree would be given effect to after her death. All these reasonings are absolutely non-plausible and common sense does not even remotely give consent to them. It is fraudulent all the way. The whole thing was buttressed on the edifice of fraud and it needs no special emphasis to state that what is pyramided on fraud is bound to decay. In this regard we may profitably quote a statement by a great thinker:
“Fraud generally lights a candle for justice to get a look at it; and rogue’s pen indites the warrant for his own arrest.”
Ex consequenti, the appeal is allowed and the judgment and decree of the High Court in the Second Appeal as well as the judgments and decrees of the courts below are hereby set aside and as a natural corollary the judgment and decree dated 27.11.1973 is also set aside. There shall be no order as to costs.
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2012 (5) TMI 647
Unexplained Cash Credits u/s 68 - The client code shown by the CSE and as provided by the assessee varied and on this basis, the AO held that the purchases shown by the assessee were not genuine, therefore, the sale proceeds were bogus/sham - HELD THAT:- Revenue authorities have heavily relied on the discrepancy pointed out by CSE, regarding client code, but at no point of time the revenue authorities have been able to prove that the sale of the impugned shares was bogus/sham. We are unable to sustain the additions primarily on the point that the credits in the books of the assessee are on account of sale of a commodity (shares), which is duly reflected in the DMAT account, both of which cannot be challenged. We are in full agreement with the argument of the AR that even if the sale by any chance could not be effected through broker, even then the sale would remain sale, till the time it is not proved otherwise that these were not conducted through regular channels. The burden of proof shifts on the department, which the revenue authorities have failed. Making an addition on conjectures cannot be expected to be sustained. Therefore, additions by AO are to be deleted.
Sale Proceeds of Shares - Credits u/s 68 or Not? - AO disallowed the claim of loss incurred on sale of shares - HELD THAT:- As the sales of shares are not bogus, sale proceeds of the shares are not to be treated as credits u/s 68. Thus, the loss on the sale of shares is allowed.
Decision in favour of Assessee.
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2012 (5) TMI 646
Issues Involved:
The issue involves an application u/s 35F of the Act seeking waiver of duty demand, interest, and penalty based on the claim of cenvat credit for packing material supplied along with spare parts.
Summary:
The appellant, a job worker of Maruti Suzuki Ltd., supplied spare parts to Maruti Suzuki Ltd. on MRP basis, but dispatched them in loose condition along with cartons/boxes printed with spare part details and MRP. The Department contended that since the goods were sent in packed condition, cenvat credit for packing material was not admissible. This led to a duty demand, interest, and penalty being imposed, which was upheld by the Commissioner (Appeals).
The appellant argued that since the spare parts were supplied along with printed packing material, implying the use of inputs for manufacturing the packing material, cenvat credit should not be denied solely based on physical packing. The Tribunal, after considering the contentions and facts of the case, found merit in the appellant's plea. A prima facie case for waiver of the condition of pre-deposit was established, leading to the allowance of the stay application and waiver of pre-deposit of interest and penalty.
The appeal was directed to be listed for further proceedings.
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2012 (5) TMI 645
Addition u/s 68 - Held that:- In the present case, no inquiry was made by the Assessing Officer. He simply treated the information collected by the Investigating Wing as a gospel truth. To our mind that information could be sufficient for starting investigation to that cannot be a substitution of all sort of evidence. On due consideration of the facts and circumstances and the order of Ld CIT (A) we do not find any force in the contentions of Ld DR. Appeal of the revenue is dismissed.
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2012 (5) TMI 644
Issues involved: Appeal filed by assessee-company regarding addition on account of foreign travel expenses for A.Y. 2007-08.
Summary:
Issue 1 - Addition on account of foreign travel expenses:
The assessee-company, engaged in the design and supply of lighting products, claimed deduction for foreign travel expenses of `3,52,271/- incurred during the previous year 2006-07. The purpose of the trip to Bangkok by two directors was to discuss projects with suppliers. The Assessing Officer disallowed the expenses, stating lack of evidence showing a business nexus with the visited places or future transactions. The CIT(A) upheld the disallowance. The Tribunal noted the absence of concrete evidence linking the travel to business activities or benefits to the company. Despite submissions by the assessee's counsel, the Tribunal found no material supporting the business purpose of the travel and upheld the tax authorities' decision to disallow the expenses.
Conclusion:
The Tribunal dismissed the appeal, upholding the disallowance of foreign travel expenses for lack of evidence establishing a business nexus or benefit to the assessee-company from the trips.
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2012 (5) TMI 643
Reassess the income of the appellant under sections 147/143(3)/145(3) - change of opinion - Disallowance of loss on Indian operations and estimation of income therefrom - Disallowance of payment of employees contribution - Disallowance of payment of employees contribution - Recomputation of deduction U/s 80-HHB of the Act - Interest U/s 234D - disallowance of additional depreciation - prior period expenses
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2012 (5) TMI 642
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Income Tax Act.
Summary:
The Revenue appealed against the deletion of a penalty of Rs. 10,72,110 imposed by the Assessing Officer u/s 271(1)(c) of the Act. The assessee had accepted an addition of Rs. 31,54,191 in the assessment, and penalty proceedings were initiated. The penalty was levied, but the CIT(A) deleted it, stating that the provision for penalty was introduced retrospectively after the return was filed. The Revenue argued that the assessee had knowledge of the amendment but did not revise the return, showing malafide intent. The assessee contended that the deduction claimed was permissible at the time of filing the return, and there was no obligation to file a revised return. The Tribunal held that the assessee was entitled to deduct the amount in question before the amendment and that there was no concealment or furnishing of inaccurate particulars in the original return. Therefore, the penalty deletion was upheld, and the appeal was dismissed.
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2012 (5) TMI 641
Disallowance of expenditure u/s 14A
Due date for payment of deposit linked insurance premium
Nature of income - We are unable to appreciate the contentions of the assessee that the income should rightly be assessed under the head “Income From House Property”. The assessee cannot take a “U” turn by filing an additional ground. To decide as to whether an income has to be assessed under the head “Income From Business” or under the head “Income From House Property”, certain material facts have to be examined. The agreements, the functions of the parties, etc., have to be seen.
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2012 (5) TMI 640
Revision u/s 263 - Claim of deduction u/s 80-IB(10) - Held that:- The requirement of filing the audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met. The Tribunal was also held right in holding that the Commissioner did not even call for any explanation of the assessee and the issue of fulfillment of the conditions of section 80-IA had not been part of the show-cause notice. Therefore, it could not form the basis for revision of the assessment order under section 263.
The project had started prior to 1-4-2005 the definition of built up area as given in section 80IB(14) is not applicable and the built up area as per the DC rules of PMC was less than 1500 sq.ft. The Assessing Officer has included the area covered by the terrace in the built up area. The terrace is not includible in the built up area computed as per DC rules. Accordingly, the built up area of the flat is less than 1500 sq.ft. and therefore, the CIT(A) was justified in allowing the deduction as claimed by the assessee.
Deduction u/s 80-IB(10) - Held that:- If the project is started prior to 1-4-2005 the limit of 2000 sq.ft. or 5% whichever is lower is not applicable and the deduction is to be allowed to the entire project. Assessing Officer was not justified to take date of commencement as 20/04/2005 which was date of revalidation. So Brahma Aangan project already commenced on 17/03/2001 i.e. prior to 01/04/2005. Similarly in respect of Brahma Majestic plan was sanctioned on 27/06/2003 i.e. much before 01/04/2005. We direct the authorities below to allow deduction u/s 80-IB(10) of the Act on account of both these projects.
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2012 (5) TMI 639
Disallowance of interest to the advances given to HGPL - Held that:- CIT(A) while deciding this issue has deleted the additions of ₹ 46,64,53,318/-. However, at the same time on the proposed addition of ₹ 27,54,66,028/-, the Ld. CIT(A) has given part relief to the assessee and confirmed the disallowance of proposed interest relateable to advances made within the year on proportionate basis based on the ratio of borrowed funds to total funds. The assessee before us has suo motto calculated such disallowance at ₹ 9,01,98,977/-. To this extent, we find that both the orders of lower authorities are lacking in details regarding break up of interest attributable to the various categories referred to above.
So far as the advance to HGPL is concerned, we find that the said advance has direct bearing with the commercial needs of the assessee. Once it has been established that the advances have been made for commercial reasons, no part of interest can be disallowed.
Therefore, modifying the order of Ld. CIT(A), the AO is directed to allow the claim of interest
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2012 (5) TMI 638
Issues Involved:
1. Disallowance of export commission u/s 40(a)(i) of the Income-tax Act, 1961.
2. Revisionary proceedings u/s 263 of the Act.
3. Obligation to deduct tax at source u/s 195 on payments to non-residents.
Summary:
1. Disallowance of Export Commission u/s 40(a)(i):
The assessee was aggrieved by the CIT(Appeals) confirming the disallowance of export commission by the A.O., relying on Section 40(a)(i) of the Income-tax Act, 1961.
2. Revisionary Proceedings u/s 263:
The appeal was filed against an order passed by the Assessing Officer pursuant to revisionary proceedings u/s 263 of the Act. The revisionary proceedings involved the same issue since the original order of A.O. was set aside for not considering the disallowance on export commission paid. The Tribunal had previously dismissed the appeal of the assessee, holding that the assessee was obliged to deduct tax at source on the payment of commission.
3. Obligation to Deduct Tax at Source u/s 195:
The Tribunal, in its order, discussed the obligation to deduct tax at source u/s 195. It was noted that the representatives were remunerated for services rendered, which included promoting, marketing, and providing technical and commercial information. The Tribunal referenced the Supreme Court decision in Transmission Corporation of A.P. Ltd and the Special Bench decision in Prasad Productions Ltd., concluding that if the payment to non-residents is chargeable to tax, the payer must deduct tax at source. The Tribunal found that the assessee did not have a bona fide belief that the payments were not taxable in India, and thus, the non-deduction of TDS u/s 195 denied the assessee the benefit of deduction of expenditure.
Conclusion:
The Tribunal upheld the CIT's decision, confirming the disallowance of the export commission and the enhancement of the assessment. The appeal filed by the assessee was dismissed. The order was pronounced in the open court on 3rd May, 2012.
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2012 (5) TMI 637
Disallowance of claim of deduction u/s 80IB(10) - Held that:- Assessing Officer was not justified in rejecting the affidavit furnished by the assessee and concluding that the appellant had constructed duplex house no. 128(28) having built up area of 1610.53 sq.ft. Since during the year under consideration, out of 35 Duplex Houses, only five houses were sold and the assessee has claimed that in respect of three houses, different size was found by the DVO. We also find that the Assessing Officer had not examined the affidavit filed by the assessee nor cross examined the respective occupant of house no. 128(28) to ascertain the additional construction done by him. In the interest of justice, we restore this ground back to the file of the Assessing Officer to have a fresh measurement of the house and if the same is found to be up to 1500 sq.ft., he shall allow the assessee’s claim for deduction subject to other conditions of section 80IB(10) being fulfilled. We direct accordingly.
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9911796707
